Whoever founds a startup must first ask himself two elementary questions: Does my business idea really solve a problem? And can I earn money with it? This quick check provides answers.
It is one of the most successful books in the industry: With “The 100 Dollar Startup” Chris Guillebeau has written a primer for people who want to set up their own business and want to do so with little money and without a bank loan. The book is essentially based on the assumption that only three things are necessary for a successful self-made business:
- A product or a service
- A group of willing customers
- A technical channel for accepting payments
As for ordinary companies, the business idea is at the beginning. Guillebeau’s credo: “Don’t think innovation, think usefulness.” Only if the benefit of a business idea goes beyond its own problem horizon does it have the potential to generate enough sales. But how do I find out?
In his book, Guillebeau shows, among other things, how a business idea can be tested for suitability in seven steps. Here we go.
1. Care about the problem you solve
Imagine two circles half overlapping each other. One circle represents one’s own passion for an activity or hobby, while the other represents the needs of a potential customer group. The greater the overlap between the two circles, the more promising – at least theoretically – the market is. Chris Guillebeau speaks of convergence in this context. But how does this work in practice?
2. Start with a keyword search
According to Guillebeau, a detour to Google is enough to estimate the size of the market. With a corresponding keyword search, the number and relevance of search terms that match your own product can be determined. Suppose you want to find the non-existent website of your business idea at the top of Google – which keywords would you enter? Which keywords are particularly popular can also be seen by looking at the ads.
3. Solve a problem instead of trying to talk it up
Guillebeau warns against trying to solve a problem that may not even exist on the customer side. From the author’s point of view, the problem solved by a product or service must be so painful that the market knows it. Affected customers can be converted so also much more easily into a paying customer, as if you talk them up something.
4. See your product as a painkiller
Rolex watches or Gucci handbags may only be status symbols, but most products customers buy for a more profane reason, as Guillebeau explains: “On a deeper level, they want to be loved. Having something to relieve the pain could be more effective than recognizing a need.” In plain language, show customers how your product can help relieve pain.
5. Don’t just be cheaper
Another indicator of the quality of a business idea is its differentiation from the rest of the market participants – at least that is what many founders believe. But that’s not enough, warns Guillebeau: “It’s not enough to be different; it’s more about specialization that makes you better,” says the author. By the way, a lower price is not one of them. Instead, it is advisable to think in terms of solutions. Which ones already exist on the market and why don’t they make customers happy? Write that down!
6. Create personas to get valuable feedback
Those who want to set up a business should not rely on a mere Internet search. Because nothing is more valuable than personal feedback from the desired customer group. Can they really use the product? Are they missing a feature? What have they always been bothered about? But friends and aunt Mimi are not the right contacts for honest feedback. Guillebeau advises you to only ask people who fit your customer profile. This is where the creation of personas helps: these are fictitious people who profit most from the advantages of their own business idea. Then you continue with interviews with the people concerned.
7. Create a community
Building on point six, you can turn these potential customers directly into ambassadors of your business idea. You can do this by offering your product or service free of charge to a closed circle of people with the request to tell friends about it. You can also promote your business idea in the meantime. How about a reputation building blog? Have you ever thought about a forum entry in a special interest forum? Guillebeau sees this as the foundation stone for good business ideas: Trust. The greater the trust, the more successful your business.